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 LA Restaurant Adds Healthcare Surcharge to Every Tab

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MellowRoast

  • Total Posts: 1934
  • Joined: 8/21/2007
  • Location: 'Nooga
LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 3:58 PM (permalink)
I guess restauranteurs/restaurateurs are getting pretty creative.  Just curious if you'd pay the surcharge, subtract it from the gratuity, or just eat elsewhere. 
 
http://losangeles.cbslocal.com/2014/02/17/local-restaurant-adds-surcharge-to-tabs-to-pay-for-employees-healthcare/
 
#1
    Michael Hoffman

    • Total Posts: 17845
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    • Location: Gahanna, OH
    Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 4:05 PM (permalink)
    The restaurant owner is making a statement. He could have just increased prices to get the same amount of money, but instead chose to show his feelings about Obamacare. I expect lots of other businesses will be doing the same. I'd consider it just a hike in the price of a meal and I certainly wouldn't take it out on my server by cutting the tip.
     
    #2
      EdSails

      • Total Posts: 3588
      • Joined: 5/9/2003
      • Location: Mission Viejo, CA
      Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 4:06 PM (permalink)
      Ridiculous! I wonder what they would do if I subtracted 6% from the bill to pay for my healthcare?
       
      #3
        felix4067

        • Total Posts: 3303
        • Joined: 12/13/2003
        • Location: Near Grand Rapids, MI
        Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 4:40 PM (permalink)
        Michael Hoffman


        I'd consider it just a hike in the price of a meal and I certainly wouldn't take it out on my server by cutting the tip.

        Agreed. But I would also probably eat elsewhere, for reasons having nothing to do with them raising prices. What isn't clear from the article (although I tend to doubt it) is if that surcharge goes directly to the employee to pay for their own health care. If the owner keeps it, then it would be ludicrous to take it out of the tip. If the server gets it, then it would be marginally less so.
        <message edited by felix4067 on Tue, 02/18/14 4:42 PM>
         
        #4
          Greymo

          • Total Posts: 3666
          • Joined: 11/30/2005
          • Location: Marriottsville, MD
          Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 4:56 PM (permalink)
          If a restaurant owner has costs that he cannot deal with, except to raise prices..........great!  To make a political statement of some sort......................no  no  no.    I would never eat at a restaurant that did this.  Just raise the prices on the menu and deal with it in a business-like way
           
          #5
            Glenn1234

            • Total Posts: 510
            • Joined: 3/24/2009
            • Location: Northern VA (the nasty Washington D.C. 'burbs part
            Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 5:15 PM (permalink)
            Michael Hoffman


            The restaurant owner is making a statement. He could have just increased prices to get the same amount of money, ....


            At first, I thought the same thing.  The restaurant owner could just increase prices to get the same amount of money.  But, then thought about the fact that almost all restaurants put sales tax as a separate line item, rather than including the tax in the price of food.  They do this so that their prices don't appear less competitive.   If restaurant A said their steak is $20, and then you received a bull for the $20 plus $2 in tax ($22 total), ... that "appears" more competitively priced than restaurant B who includes tax, but says the steak is $22.   People mentally register restaurant B as being more expensive, even though they actually have the same price as restaurant A.     
               Now add in a couple more bucks for healthcare, and restaurant B is suddenly saying they are selling a $24 steak.  Restaurant A is still advertising the same steak for $20, and adding on the government mandated fees to the end of the bill.   For now, I suspect, most places will be a restaurant C and continue to add sales tax at the end of the bill, but add the healthcare costs onto the base prices on the menu.   I'm not sure yet whether I agree with how the restaurant in the article is doing it, but I see the logic behind it. ... Show the lowest price you can, and then add the government mandated fees at the end of the bill, so the customers don't "blame" the restaurant for being "overpriced".  
             
             
            Glenn
             
             
             
             
             
            <message edited by Glenn1234 on Tue, 02/18/14 5:18 PM>
             
            #6
              Foodbme

              • Total Posts: 9574
              • Joined: 9/1/2006
              • Location: Gilbert, AZ
              Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 5:36 PM (permalink)
              If I owned a restaurant, I would not use a Surcharge to offset costs. All that does is create negative attention to the issue. 
              I would construct a well written notice to customers and put it in every menu explaining why we need to raise prices and shift the blame where it belongs ------- to Washington, D.C.
              "Notice to my Loyal Customers"
              First, let me THANK YOU for your continued business and support.
              We work very hard to hire loyal employees who are committed to providing delicious food and exceptional service every time you visit our restaurant. In order to attract good people, we believe in providing them with a working environment that will cause them to want to provide exceptional food & service. That includes a benefits program that is affordable for them and us.
              As a result of recent MANDATORY FEDERAL LEGISLATION and rising health insurance premiums, the costs of providing our valued employees with basic benefits has risen considerably. This has made it necessary for us to reluctantly raise some of our prices to be able to continue provide a minimal benefits package for our employees. I'm sure you can relate to the need for medical coverage. 
              Be assured we're doing everything we can to keep our operating costs as low as possible while maintaining our high standards of QUALITY of our food and customer service. To help us  keep our costs down, PLEASE do not take the sugar, sweeteners and salt & pepper shakers home with you!
               
              #7
                Greymo

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                Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 5:44 PM (permalink)
                I think that you are wrong.  No one needs to explain why his prices
                have increased.   Raise the prices to what you have to,  in order to meet your costs, and forget it. The customer does not really care what the need is, and does not care to read about it.
                 
                #8
                  Foodbme

                  • Total Posts: 9574
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                  Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 5:59 PM (permalink)
                  Greymo

                  I think that you are wrong.  No one needs to explain why his prices
                  have increased.   Raise the prices to what you have to,  in order to meet your costs, and forget it. The customer does not really care what the need is, and does not care to read about it.

                  Obviously we agree to disagree and that's OK.
                  By just quietly raising prices you create a silent price resistance and customers will start leaving and it will be gradual to the day when you open up and wonder where all your customers went. And then close the doors.
                  I've found in all my business experience, and I've owned and managed a number of businesses, if your customers AND EMPLOYEES understand why you make some of the decisions you make they are more likely to buy in to what you're trying to accomplish. Not all of them but most of them. At least those who don't will understand where you're coming from.
                  One of the best ways to kill a business is lack of internal and external information transfer. 
                  Sure, the notice I offered is an appeal for understanding and maybe a little sympathy and empathy. It's less harsh than saying "Here's my prices. I have reasons for those prices and if you don't like it, so what." 
                   
                  #9
                    jman

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                    • Location: berea, KY
                    Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 6:10 PM (permalink)
                    It could be that the owner knows his customer base so well that he felt like his customer would appreciate his explanation on how government action caused the bottom line price to the customer to increase.
                     
                    #10
                      Greymo

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                      • Location: Marriottsville, MD
                      Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 6:13 PM (permalink)
                      When I go out   for a nice dinner, I do not care to read any statement as to why they have increased their prices.  The restaurant business is very competitive.  No one raises their prices unless they have to, in order to pay their bills and to make a profit.
                       
                       
                       
                      #11
                        ann peeples

                        • Total Posts: 8317
                        • Joined: 5/21/2006
                        • Location: West Allis, Wisconsin
                        Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 6:44 PM (permalink)
                        I agree, Greymo, when I go out to eat, I don't want to read any statements as to why prices on the menu go up. There are a zillion reasons increases occur, and we haven't been given any explanation before. And is this even legal?
                         
                         
                        #12
                          Glenn1234

                          • Total Posts: 510
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                          • Location: Northern VA (the nasty Washington D.C. 'burbs part
                          Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 6:56 PM (permalink)
                          Greymo


                          When I go out   for a nice dinner, I do not care to read any statement as to why they have increased their prices.  The restaurant business is very competitive.  No one raises their prices unless they have to, in order to pay their bills and to make a profit.



                           
                          "No one raises their prices unless they have to"  ...
                           
                           
                          And yet I hear many times on this forum someone complaining that XYZ Restaurant is "overpriced".  So, it seems that many do believe that some restaurants raise their prices beyond what they have to.  At least that's the perception many have.   ... (On a separate note, the term "overpriced" can be an entire separate topic.  It's only "overpriced" if the demand isn't there at that price, and the market won't bear that price.)
                           
                           
                          Glenn   

                          <message edited by Glenn1234 on Tue, 02/18/14 6:57 PM>
                           
                          #13
                            Glenn1234

                            • Total Posts: 510
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                            • Location: Northern VA (the nasty Washington D.C. 'burbs part
                            Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Tue, 02/18/14 7:05 PM (permalink)
                            ann peeples

                            There are a zillion reasons increases occur, and we haven't been given any explanation before. And is this even legal?


                             
                            It is probably legal.  Restaurants already can legally add on other types of government mandated expenses at the end of the bill such as sales tax, ... and sometimes a local separate entertainment tax in some jurisdictions. 
                             
                             
                            Glenn
                             
                             
                             
                            #14
                              Foodbme

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                              • Location: Gilbert, AZ
                              Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Wed, 02/19/14 12:02 AM (permalink)
                              quote=jman]
                              It could be that the owner knows his customer base so well that he felt like his customer would appreciate his explanation on how government action caused the bottom line price to the customer to increase.

                              Thank You for getting the point.
                              Most customers don't have a clue what it costs to run a business.
                              As the customer in the original post states, "
                              One critic on the review site, Yelp, claimed: “It’s not MY responsibility to take care of YOUR employees’ healthcare. It's Yours!"
                              To which I would respond, "You are correct sir. And that's what I'm attempting to do but the costs of complying with Federal Regulations that have increased my overall costs have gotten to the point that I cannot meet my assumed responsibility to provide adequate coverage for my people without raising prices. I control every expense that I can control. When I have cost increases that I cannot control, then I have 2 options.
                              OPTION ONE is to raise our prices as little as possible to offset uncontrollable costs and keep 50 families employed, pay my rent and meet all my other obligations and continue to provide high quality food & service. 
                              OPTION TWO, I can close the business and put over 50 families out of work, forcing them to go on unemployment and let you, and YOUR government take care of their medical expenses. 
                              In order to do Option One, I need to raise prices since I've done everything imaginable to reduce all my costs.
                              Option Two is much simpler - Just Shut 'Er Down. 
                              Option Two means My employees are no longer my responsibility-----THEY'RE YOURS!
                              Since you pay the taxes that fund all the "Social" programs for the unemployed, They Are now YOUR Responsibility. You spend the sleepless nights worrying about how you're going to take care of them. "
                               
                              My Second reason for creating the letter is that is a better alternative than just tacking a Surcharge on the check and pissing every customer off.
                              GOD BLESS AMERICA!
                              <message edited by Foodbme on Wed, 02/19/14 12:09 AM>
                               
                              #15
                                EdSails

                                • Total Posts: 3588
                                • Joined: 5/9/2003
                                • Location: Mission Viejo, CA
                                Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Wed, 02/19/14 4:43 PM (permalink)
                                Here's a new article by a local LA columnist. It makes things a little clearer about what Republique is trying to do. I guess for me, I understand more why they did it.
                                 
                                #16
                                  felix4067

                                  • Total Posts: 3303
                                  • Joined: 12/13/2003
                                  • Location: Near Grand Rapids, MI
                                  Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Wed, 02/19/14 5:10 PM (permalink)
                                  That does explain it a lot better. It still sits funny with me that they have to tell customers they can reduce their tips to compensate for the surcharge, though.
                                   
                                  #17
                                    Foodbme

                                    • Total Posts: 9574
                                    • Joined: 9/1/2006
                                    • Location: Gilbert, AZ
                                    Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Wed, 02/19/14 9:51 PM (permalink)
                                    I sent the owners of Republique the link to this thread.
                                    It'll be interesting to see if they respond.
                                    Stay tuned in!
                                    THEY REPLIED!
                                    "Thanks Jim. I would love to engage in the discussion but it seems to turn into endless rants about Obamacare etc. 
                                    In fact, this is just a small business answer to a problem in California that stops the service staff from giving anything from the tip pool to the kitchen and allows the service staff to simply ask you to reduce the gratuity by the amount of the charge. It is also voluntary and it can be removed as well. All part time people are covered and it is far better for the guest to have lower menu prices. The restaurant still subsidizes it as well."
                                    On Wed, Feb 19, 2014 at 2:27 PM, Foodbme wrote:
                                    There's a hefty discussion going on about your recent LA Times article on www.roadfood.com.
                                    I'm "Foodbme" in the discussion. There are over 100,000 Subscribers to the web site.
                                    Thought you'd be interested

                                    <message edited by Foodbme on Thu, 02/20/14 10:08 PM>
                                     
                                    #18
                                      Turtle66

                                      • Total Posts: 114
                                      • Joined: 1/31/2014
                                      • Location: Sacramento, CA
                                      Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Thu, 02/20/14 12:18 AM (permalink)
                                      Don't know how i feel about this one......
                                       
                                      #19
                                        MikeS.

                                        • Total Posts: 5360
                                        • Joined: 7/1/2003
                                        • Location: FarEasternPanhandle, WV
                                        • Roadfood Insider
                                        Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Thu, 02/20/14 11:57 AM (permalink)
                                        Folks you've done a great job keeping politics out of this thread, carry on.
                                         
                                        #20
                                          mar52

                                          • Total Posts: 7605
                                          • Joined: 4/17/2005
                                          • Location: Marina del Rey, CA
                                          Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Thu, 02/20/14 12:41 PM (permalink)
                                          That percentage should be taxed as income.  Not sure how it will be handled.
                                           
                                          Years ago restaurants tried charging a 2 - 3% surcharge for credit card use.  That became illegal because it meant you were getting a discount for paying cash.
                                           
                                          I think it was because it gave the proprietor a way of skirting tax payments.
                                           
                                          If you want that extra 3%...  add it to your food prices.  Do not make a statement about it.
                                           
                                          #21
                                            MellowRoast

                                            • Total Posts: 1934
                                            • Joined: 8/21/2007
                                            • Location: 'Nooga
                                            Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Thu, 02/20/14 1:10 PM (permalink)
                                            Mar52, I suspect you're right.  Very similar to the dreaded restaurant auto-gratuity as outlined here:
                                             
                                            http://smallbusiness.foxbusiness.com/finance-accounting/2014/01/06/how-irs-tipping-crackdown-impacts-restaurants-servers/
                                             
                                            #22
                                              harriet1954

                                              • Total Posts: 1087
                                              • Joined: 3/29/2003
                                              • Location: Edgewater Park, NJ
                                              Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Thu, 02/20/14 3:03 PM (permalink)
                                              Does a menu even exist online? I'd be interested to know, since I don't see one on their website - just lots of self-promotion about the owner, his wife, and who I guess is the executive chef, but I don't care enough to read more than a few lines of their fascinating lives. The food is why you go anyplace to eat, and I don't even know what sort of food they have. I'll find out whether any of my family/extended family have ever been there. Pay for someone else's healthcare? Reimburse me for the amount they take out of my check every two weeks!
                                               
                                              #23
                                                easydoesit

                                                • Total Posts: 470
                                                • Joined: 6/20/2007
                                                • Location: La Crosse, WI
                                                Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Fri, 02/21/14 1:33 PM (permalink)
                                                No politics!  I don't know how many here watch the hated Fox News, but the two owners of the restaurant were on Bill O'Reilly last night, and said this really had nothing to do with healthcare per se -- they could have referred to it as a surcharge for minimum wage, or for some other reason.  They just chose healthcare, because...well, that was not clearly explained.  At least I didn't get it.
                                                 
                                                What they did say was that this was a way for them to get tips to the kitchen staff, which is not allowed now under California rules.  Tips cannot be shared from the wait staff to the kitchen, and the customer may not tip the kitchen.
                                                 
                                                Why they chose healthcare as a reason was not clearly explained.  The owners both seemed to stumble a bit when asked.  Same for when Bill asked their opinion of healthcare -- the response was sort of vague.
                                                 
                                                They emphasized it was voluntary for the customer.  One of the articles below says all of the eighty employees have the same healthcare policy, including the owners.
                                                 
                                                The suggested addition is three percent.  And they mentioned the ten percent sales tax in California -- that's high enough.
                                                 
                                                The interview was last night, Thursday Feb 20.  I couldn't find much on the internet today about the interview, except here is one, and obviously from some blogger who has a kneejerk negative attitude towards O'Reilly.
                                                 
                                                http://www.onecitizenspeaking.com/2014/02/bill-oreilly-confuses-tax-avoidance-scheme-with-obamacare.html
                                                 
                                                http://losangeles.cbslocal.com/2014/02/17/local-restaurant-adds-surcharge-to-tabs-to-pay-for-employees-healthcare/
                                                 
                                                Ten percent sales tax, and rules that forbid tips from going to the kitchen (why?) -- as Bill said, the state sure has their tentacles into the restaurant business.
                                                 
                                                Here at home, tips may be shared, or may not -- seems to be a personal choice of the management.  Many places here specify that for in-house meals the waitperson gets the tip, but on take-out it goes to the kitchen.  
                                                 
                                                 
                                                #24
                                                  felix4067

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                                                  Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Fri, 02/21/14 4:18 PM (permalink)
                                                  Huh...this is literally the first time I've heard that it was voluntary for the customer. Every other article/post/blog/whatever has said the surcharge is added to the bill, and the customer can choose to deduct it from whatever tip they might have left if they choose. Which is nothing like the same as the surcharge being voluntary. But if they're saying it has absolutely nothing whatsoever to do with health care, but instead is a way of sharing tips with kitchen staff, then not only are they blatantly lying about what the surcharge is for, they are breaking the law by doing so. I may be wrong, but that's how it seems to me.
                                                   
                                                  I have no idea what the rules are for tipping here, but typically kitchen staff makes well above minimum wage, while servers make well under, so only the employees making less than minimum wage share tips. Waitresses tip out their bartenders, and their bus staff, and bartenders share tips between themselves if there is more than one working.
                                                   
                                                  #25
                                                    CCinNJ

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                                                    Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Sat, 02/22/14 12:31 AM (permalink)
                                                    I keep it really simple when I dine out. I wanna have a nice peaceful delicious meal & lots of fun. I don't need a manifesto from any restaurant on anything.

                                                    I wouldn't dine there. Not because of the price or any charge but the attitude from ownership seems rather clueless & offensive to a customer base that's not only spending it....but spending plenty there. It's pretty much a given that the vibe of the place is revolving around this mess.

                                                    How silly to say something like this or think it out loud with a reporter....


                                                    But Chait was a little surprised that anyone affluent enough to pay for entrees that range from $18 for butternut squash agnolotti to $75 for prime dry-aged cote de boeuf would gripe about paying a tiny fee so the person washing the tricolore salad can have a modest healthcare plan.



                                                     
                                                    #26
                                                      MetroplexJim

                                                      • Total Posts: 3706
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                                                      • Location: McKinney, TX
                                                      Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Sat, 02/22/14 5:08 PM (permalink)
                                                      mar52


                                                      Years ago restaurants tried charging a 2 - 3% surcharge for credit card use.  That became illegal because it meant you were getting a discount for paying cash.


                                                       
                                                      It was not "illegal"; it just violated the terms of the agreement between the credit card issuer and the business.  Which reminds me of a story ...
                                                       
                                                      A few years back I was leasing a new car when I heard another customer becoming irate when the salesman refused to let him put the entire amount for his new car purchase on his Amex Platinum. 
                                                       
                                                      The GM came over and said:  "The 7% off list price you were quoted is a fair market price for the vehicle - and we thank you for your business.  Perhaps I shouldn't tell you this, but as (the brand and we as dealers) cater to a sophisticated clientele ... 
                                                       
                                                      At that price we are making a gross profit of 8% which is, again, fair market.  Should we accept your Platinum Card for the full amount, two-thirds of that profit would go to Amex; I hope you understand why that would be unaccaptable to us"
                                                       
                                                      Then the customer started in about "a cash discount" and the GM said, "That would violate our agreement with Amexco.  Thank you for coming by.  Good day."
                                                       
                                                      But the really funny part was the GM telling the salesman:  "Sorry, but I couldn't resist.  I'll spiff you a nickel ($500) for wasted time.  It's bad enough when someone is so stupid that he pays $600/year for his Amex Card to be a certain color, but then he whips it out, flashes it all about, and expects the world to be impressed.  I wonder what Freud would say about that?!"   
                                                       

                                                       
                                                      #27
                                                        MetroplexJim

                                                        • Total Posts: 3706
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                                                        Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Sat, 02/22/14 5:32 PM (permalink)
                                                        easydoesit


                                                        No politics!  I don't know how many here watch the hated Fox News, but the two owners of the restaurant were on Bill O'Reilly last night, and said this really had nothing to do with healthcare per se ...

                                                         
                                                        "Hated Fox News!"  If it is so 'hated', then why are its ratings far in excess of CNN and MSNBC combined?
                                                         
                                                        BTW:  I saw the same segment and your description of it above is exactly correct; California regulations prohibit them from distributing gratuities to kitchen staff and they wanted to generate some revenue to shoot their way.  Healthcare expenses was a convenient thing for them to blame, but their well-intended 'scheme' generated unforeseen adverse circumstance, kinda like ...
                                                         
                                                        #28
                                                          felix4067

                                                          • Total Posts: 3303
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                                                          • Location: Near Grand Rapids, MI
                                                          Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Sat, 02/22/14 5:57 PM (permalink)
                                                          See, that just makes it worse for me. It already seemed like a jerk move, and now to know that they flat-out LIED about what the surcharge was for...yeah. On my top ten places to never, ever eat...
                                                           
                                                          #29
                                                            FriedClamFanatic

                                                            • Total Posts: 1500
                                                            • Joined: 7/14/2008
                                                            • Location: west chester, PA
                                                            Re:LA Restaurant Adds Healthcare Surcharge to Every Tab Sat, 02/22/14 10:43 PM (permalink)
                                                            My.............soon to be EX..trash company......that big Waste Mngmt Behemoth....hits me for a fuel surcharge.........and....because I like to pay by check vs electronic.....an administrative Fee of $3 just to process my check! ( Have several war stories of direct/electronic transfers if you ever wanna hear them).  i'm waiting for the Obamacare surcharge!
                                                             
                                                            #30
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